Walker says he'd veto Anchorage legislative office purchase

Gov. Bill Walker said Thursday that he would veto the purchase of a legislative office building in Anchorage if that item remains in the state infrastructure budget.

Walker told The Associated Press the purchase is not compatible with where the state is financially right now. He said legislators should know where he stands on the issue as they put the budget together.

The current Senate version of the capital budget includes $32.5 million for the building and land purchase of the Anchorage LIO. The debate over buying the building comes after a state court judge last month ruled that the Legislature's lease of the building violated state contracting rules and should be tossed out.

"I think that when we're not able to fund many, many, many things, asking people to do things differently, pay taxes, lower dividends, those kinds of things, I think to acquire that building for legislative offices when we have vacant space available in our own buildings, which we already own, I think is not fiscally responsible," he said.

Senate Finance Committee co-chair Anna MacKinnon, who takes the lead on the capital budget on the Senate side, said she went to Walker before introducing her draft rewrite of the bill to ask him his thoughts. The governor told her he needed to consider it, she said.

MacKinnon, R-Eagle River, said she never heard from him directly that he had made a decision. "I'll find out why later," she told reporters when asked for reaction to Walker's decision, adding later: "Maybe I have a memo in my inbox."

Walker's legislative director informed MacKinnon's chief of staff of the governor's decision after Walker disclosed it when asked during the AP interview.

The choice to advance for consideration the purchase of the building was made because it was the least costly way to close out a lawsuit that is a potential liability for the state, among other reasons, MacKinnon said. The state Atwood building would not be immediately ready for the Legislature to move there, which would require renting space somewhere else in the meantime, she said.

"I think the governor has acted in a way that is inconsistent with the best financial choices for the Legislature," she said.

Amy Slinker, spokeswoman for 716 West Fourth Avenue LLC, the building owner group, wrote in an emailed statement that the group agreed to the $32.5 million purchase price proposed by the Legislative Council March 31.

"We stand ready to work with the parties to accomplish the council's directive," Slinker wrote.

The Senate Finance Committee proposed using money from the Alaska Capital Income Fund, a subset of the state General Fund, to make a simple, one-time cash payment for the building. There are a myriad of ways the Legislature could finance the purchase through bonds and with the help of state finance agencies and avoid the large, visible budget line item; however the governor would still have the final verdict over the debt payments.

Longtime Anchorage real estate developer and managing member of the building owner group Mark Pfeffer has said 716 would likely sue the Legislature if it walks away from its obligation for the office building that was custom-built for the governing body just two years ago at a cost of $44.5 million.

The Legislative Council had considered moving Anchorage legislative offices to the state-owned Atwood Building in Downtown Anchorage, which currenlty houses executive branch agencies. Department of Administration Commissioner Sheldon Fisher testified to the council March 31 that the full office space requested by the council would not be ready until January 2018 and that other state personnel would move into the Atwood space as it becomes available if the Legislature choses not to.